Use one network to connect with settlement partners

and streamline your mortgage processes.

GetConnected.

SEE

INSI

DE

End-to-end eMortgageLearn how to gain

visibility and more efficiency

into closing processes. Use

automated workflows to

share data and status

information about loans.

Dodd-Frank and RESPA

regulations remain top

concerns. Networked

services are ahead of

these changes.

Compliance Ready

For mortgage lenders, the closing process is a critical business process. Most lenders

work diligently to prepare and deliver accurate closing documents to ensure a smooth closing process. But once the initial documents are prepared, several issues arise. Lenders lose control over the process and open themselves up to risk from many sources. Anything from errors in data entry to irregular business practices can derail the process. The problems stem from a high degree of fragmentation in the industry, particularly in the closing process, with no systematic way of connecting business partners. Multiple parties in different locations are frequently involved. The various steps of the process take place in isolation, and because no one is connected, it is difficult to share information or know where the closing stands at any given moment. Faced with these challenges, mitigating risk and streamlining processes in the closing workflow are goals of every mortgage lender. In an ideal scenario, closing docu-ments flow back and forth among the lender, settlement agent, title underwriter, and other parties, with no errors, no delays, and no compliance challenges. All parties link to each other’s systems and know the status of the loan at all times. In other words, everyone is connected. To get to that ideal scenario, lenders need a solution that gives them control and serves as a hub that connects all closing partners. Lenders could glean critical data prior to closing about who’s closing their loans, connect with closing partners directly and securely, and even integrate into each partner’s unique internal process to make collaboration on things such as the HUD-1 much easier. Such a solution would give lenders

total visibility into the process. That kind of connectivity and transparency would go a long way toward mitigating risk and fraud.

FRAUD IS ON THE RISE Lenders are especially susceptible to fraud during the closing process because they often do not have enough information about settlement agents. Fraud can occur when working with third-party settlement agents whose background might be unknown and whose closing processes are disconnected from the lenders. The unfortunate fact is that fraud is a multi-billion dollar problem for the industry and is top of mind for many lenders today. FBI statistics demonstrate that mortgage fraud is on the rise. According to a recent Mortgage Fraud Report released by the FBI, the number of pending fraud investigations increased from 1,644 in the 2008 fiscal year to 3,129 in the 2010 fiscal year—an increase of 90 percent. Another type of fraud is becoming

prevalent and can mean big losses for lenders. Also known as shotgunning, multi-lien fraud occurs when a borrower uses the lag time between closing and recording to close loans with several lenders on the same property, pocketing the money from each transaction. When multi-lien fraud occurs, it’s often because there is no way to get timely data about closings that are happen-ing simultaneously, which makes it particularly difficult to identify.

COMPLIANCE IS KEY CONCERN More challenges arise from strict regulations surrounding appraisals, disclosures and the HUD-1. In the past few years, the Home Valuation Code of Conduct, Reg Z changes, the Real Estate Settlement Procedures Act (RESPA), and the Dodd-Frank Wall Street Reform and Consumer Protection Act have given the lending industry a lot to contend with. Failure to comply with regulations can result not only in delays and customer dissatisfaction, but also costly penalties for lenders.

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Given these regulatory changes, it’s no surprise that compliance is a top concern among lenders. A 2011 QuestSoft survey found 70 percent of respondents concerned with the regulations dictated by the Dodd-Frank Act. Changes required by RESPA, which went into effect in 2010, are newly implemented and lenders are still assessing the ripple effects on downstream workflows. Added to these regulations are new requirements and procedures emerging from newly created oversight such as the Consumer Financial Protection Bureau. The Bureau’s “Know Before You Owe” project consolidates data from both the Truth in Lending (TIL) and Good Faith Estimate (GFE) into a single, simplified document. Whatever form this consolidated document ultimately takes, it will undoubtedly include additional compliance requirements from lenders.

DIAGNOSING THE PROBLEM The root causes of risk and other challenges are the lack of transparency into the closing process, lack of accurate data, evolving regulations, and a fragment-ed and isolated industry that cannot connect its workflows or track the movements of its closing partners. A lender’s ability to connect with closing partners and track the closing process has a direct effect on risk management and compliance.

After all, when a lender knows who’s closing its loans and can check the status of the closing at any point, it becomes much easier to spot potential fraud, service issues, and other red flags before they turn into costly problems.

DEFINING THE SOLUTION To remain competitive, lenders must take steps now to improve the closing process and overall loan quality. But how? It is unrealistic and impractical for lenders to track the progress of each loan closing manually. What’s needed is an electronic closing service for the mortgage industry that provides:[1] A secure, direct, two-way connection with closing partners to enable visibility and collaboration[2] Risk-control information about each closing, including agent, underwriter and funds data[3] Automated compliance checks

and notifications[4] Monitoring of data and actions indicating potential fraudulent activty [5] Methods and checks to improve loan quality, ensuring that investors will accept loans with reduced risk of repurchase demands

IN NEED OF A NETWORK A networked electronic closing solution would serve lenders who are frustrated and concerned by the loss of control, lack of visibility, lack of data, and unmitigated risk that result from the disjointed closing process that exists today. Unlike some existing electronic data and document preparation and origination systems, which automate parts of the process but fail to truly integrate the parties into one another’s workflows, an electronic closing network would createsystem-to-system connections that allow all parties to close in a secure, transparent and connected state. It would serve as a hub for lenders, settlement agents, title underwriters, and recording companies to collaborate on documents quickly, easily and securely. However, building and maintaining all of these connections across the industry, especially within multiple legacy environments, would be a huge undertaking for any enterprise—one that would involve significant investment in

DiD you knowThe Consumer Financial Protection Bureau is seeking input on the integrated TiL and GFE form drafts. To get involved in the discussion, go to: www.consumerfinance.gov/knowbeforeyouowe

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The eLynx Electronic Closing network Provides:

Compliance with changing and complex government regulations

Risk-control measures using integrated loan and partner data

increased visibility through connections with settlement partners

Decreased risk of fraud with continuous monitoring and alerts

improved loan quality reducing risk repurchase demands from investors

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infrastructure and expertise. The time and money required to build an efficient, effective network would prohibit most lenders from even considering it. For that reason, the traditional, paper-based closing process has remained largely unchanged. What’s needed is a neutral, industry-leading third party that can focus on the solution and bring true industry-wide experience and connections to the table. Ideally, a software-as-a-service (SaaS) model could be the foundation for overcoming deployment and integration roadblocks. Minimal upfront costs make SaaS applications affordable, and de-ployment can take just weeks. The burden of integrating, maintaining, supporting and updating the service lies with the service provider, not the

lender. And using industry standards such as MISMO allows the service to integrate with a lender’s exist-ing workflow—and that of its closing partners—enabling industry connections that streamline the process for everyone.

A SOLUTION FOR TODAY Responding to the needs of mortgage lenders, eLynx leveraged its established industry connections with the proven capabilities of its widely used expediteSM platform to create a unique, industry-wide electronic closing network. eClosingNet (eCN) streamlines closing processes and addresses the challenges lenders face during this critical phase of the lending cycle. It is a hub that connects all parties in a mortgage transaction. The network currently consists of 25 of the top 50 lenders as well as hundreds of

medium and smaller lenders, most of the major title underwriters, and nearly all of the settlement agents in the industry. eCN is an innovative suite of services that makes it possible for disparate and isolated parties, and their unique supporting systems and eClosing conduits, to connect through a single hub rather than building multiple, point-to-point connections. The implications are great for both lenders and the industry as a whole. Using eCN, lenders can participate in two-way document and data-driven exchanges to validate settlement agent identities, monitor loan progress and performance, produce the closing protection letter, reconcile HUD statements online, investigate potential multi-lien fraud and more.

Lenders2 million mortgage loans processed

Consumers3/4 of all email recipients access documents online

Settlement Agents100,000 agents

Title underwriters5 of 5 major underwriters

Recording ServicesRegister, record, and update loan information

Post Close ServicesAudit and review loanquality

investors4 major investors

Connect with partners one time instead of building point-to-point connections.eCn Connects Mortgage industry Service Providers

eLynx eClosing net

Data DocumentsSA Database Validation

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Such transparency and collaboration creates efficiencies and mitigates risk to a degree that was never before possible.

DATA-DRIVEN INTEGRATION eLynx’s eCN service allows lenders and their partners to send closing documents immediately and securely. Documents and data can be delivered directly into a settle-ment agent’s or title underwriter’s system automatically, and partners can integrate with each other’s clos-ing tools to make data exchange seamless and convenient. In addition to mitigating risk, cutting costs, and decreasing cycle time, this direct, data-driven communication gives lenders an unprecedented level of visibility into the process. Title underwriters benefit from automatic document and data importing, as well as automatic indexing and stacking of documents, all of which decrease manual labor, reduce errors, cut

costs, and increase security.

VALUED SETTLEMENT AGENT DATA eCN’s settlement agent management (SAM) features provide the industry's largest and most comprehensive database of settlement agents that includes contact information, employer data, procedures, agent identification with various title underwriters and much more. This vital information can help lenders avoid fraud and other potentially costly problems that arise from working with unknown agents. The eLynx settlement agent data-base acts as a security checkpoint, requiring agent registration and validation, including verification by the title underwriter, before an agent can access closing documents.

MULTI-LIEN FRAUD ALERTS As part of its service, eCN’s fraud module monitors closing document transactions for suspected multi-lien

fraud. Because eLynx has processed more than 50 million mortgage loans in the United States, the company is in a unique position to monitor closing documents across multiple loans closing within a defined timeframe. If the same property address is detected on different loans, the service immediately sends an alert so that the lenders can take appropriate actions.

TRANSPARENCY EMPOWERSPERFORMANCE MANAGEMENT eCN gives lenders visibility into various phases of the closing process, so they can automatically track all documents and data exchanged during closing, and learn the status, closing date, and disbursement date of the loan. They also have instant access to reports that help manage the performance of the settlement agents and title underwriters working on their loans. This increased insight not only reduces a lender's exposure to fraud,

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it also brings to light potential service problems that could affect the borrower’s experience.

ELECTRONIC HUD-1 IMPROVES COMPLIANCE Preparation of the HUD-1 can be challenging for lenders to manage. Improving the process requires that the lender and all of its settlement services partners are on the same page and are using the same data. This can only happen when information can be shared easily, when all the parties are connected. eCN’s eHUD service provides a workspace to reconcile the HUD-1 statement online—electronically and securely. eHUD takes the manual labor out of the process and intro-duces one consistent workflow with all a lender’s settlement agents, reducing the opportunity for error. On-screen forms make it easy to compare data and identify discrepancies. Automatic audit trails and version control keep everyone current and coordinated, and data import/export reduces the need for faxing and manual data entry. The result is more accurate data that is compliant with HUD regulations, avoiding penalties and fees and making the loan more attractive to investors.

INVESTOR CONNECTIONS The Investor Delivery offering from eLynx can package, convert, and send loan data and documents to the investor of choice. Investor requriements change. An example of this is the new Uniform Loan Delivery Dataset (ULDD) requirements for submiting loan data to Fanie Mae and Freddie Mac, under the Loan Quality Initiative. The investor delivery option within eCN is continuously updated to comply with current standards. Investor delivery to a GSE can be streamlined. When eLynx receives loan data from a lender and a series of quality control verifications are completed successfully, the system produces a ULDD compliant file that

can then be submitted electronically to the appropriate GSE. eLynx is on the approved ULDD vendor list for both Fannie Mae and Freddie Mac. Automated connections with investors can be a mechanism to improve loan quality. Data and documents can be submitted to the investor at any point in the mortgage process for validation. Specific quality issues can be identified by the investor before the loan is closed, ultimately reducing the risk of repurchase requests.

CONNECTIONS ARE THE KEY To solve the problems seen in mortgage closings, eCN can be used as the electronic closing conduit for every transaction that takes place during the closing and post-closing process. Documents and data can pass from settlement agent back to the lender, and to title underwriters, investors, QC providers, recording services and more via one network. By serving as the central hub of connections, eCN pulls together and streamlines what has traditionally been a fragmented process, putting the entire industry on the path to an end-to-end eMortgage.

TAKE ACTION NOW Lenders and their settlement partners face immediate compliance challenges and an ever-growing need for timely, reliable data to manage risk and performance. eCN not only gives lenders much needed visibility and

control, it also connects industry partners in ways that never existed before, allowing for unprecedented levels of collaboration and insight that streamline the process for everyone involved. The clear advantages are greater continuity, shorter cycle times and lower costs—benefits that can increase an organization’s profitability, competitiveness and efficiency. Just as important, connecting partners and systems through eCN means lenders can give borrowers a better experience at the closing table and, in some cases, protect them from abusive practices that increase their costs. Ultimately, eCN will help propel the industry toward an end-to-end eMortgage. Because so many lenders, title underwriters, and settlement agents already rely on eLynx’s on-demand, web-based services for secure electronic clos-ing workflows, eCN is attracting attention across the industry. Broad adoption will ensure the viability of the solution and lay the foundation for collaboration in the rest of the lending process. What’s more, eLynx has built many of the relationships and put the infrastructure in place to take the natural next step toward a comprehensive, end-to-end eMortgage solution. In other words, eLynx is the right player with the right services, the right focus, and the right partnerships to solve broad-based industry problems.

in 2010, Fannie Mae and Freddie Mac joined forces to create the Loan Quality initiative (LQi). The objectives of the LQi are to

promote complete and accurate loan data, eliminate the delivery of ineligible loans, and reduce repurchase risk and

pricing errors. For more, visit: eFannieMae.com

HAVE QuESTionS, wAnT MoRE inFoRMATion?For more information about how eCn can enhance your end-to-end process, improve loan quality, and proactively keep you in-line with ever-changing regulations, call us at 800.466.5969.

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